Illinois spending heavily to retain companies

More than $230 million already pledged this year to 27 companies

state won't reveal names of 21 firms

Mitsubishi Motors in Normal is one of 27 companies in Illinois to receive incentives from the state this year to remain in Illinois and create new jobs. (JOHN DZIEKAN, CHICAGO TRIBUNE 2002)

Illinois in 2011 is on pace to provide much more money in financial incentive programs to businesses to retain and add jobs, with the total through early May exceeding $230 million pledged to 27 companies.

That is nearly the amount pledged all of last year by Illinois to keep corporations from leaving the state or to attract businesses to relocate or expand here, the Tribune has learned.

Gov. Pat Quinn is turning to the incentives, which include tax credits, training funds and grants, as Illinois copes with a moribund economy and battles other states to woo companies that have shown a willingness to move — or stay put, if the price is right.

Last year, the state pledged about $236 million in similar programs to 53 companies; the figure was about $116 million to 47 companies in 2009.

Some of this year's biggest incentive deals have come with high-profile announcements, such as the agreement with Motorola Mobility to keep its headquarters in Libertyville in exchange for more than $117 million in incentives. But other deals haven't been announced.

The identities of 21 of the 27 companies receiving a total $53.1 million were not disclosed in a list provided to the Tribune on Tuesday by the state's Department of Commerce and Economic Opportunity.

The company names weren't released because of nondisclosure agreements with the companies, because contracts have not been finalized or because employees had not been told of plans at the companies in question, department spokeswoman Marcelyn Love said in a statement.

The state's packages include corporate income tax credits from the state's cornerstone program, Economic Development for a Growing Economy, or EDGE. Some companies also received training funds and grants. The packages come with stipulations that a business must agree to maintain or increase employment for a set period and make a certain investment in Illinois.

In Motorola Mobility's case, the company pledged to spend more than $500 million on research and development over the next three years, essentially what the company already had planned to spend, in exchange for the largest package Quinn has offered.

Quinn said he believes the incentive programs are crucial to bucking up the struggling Illinois economy.

"(The EDGE tax credits) have encouraged companies like Mitsubishi, Chrysler and Navistar to grow in Illinois, creating and retaining thousands of jobs for working families across our state. Last year, Illinois was fourth in the nation in job creation," Quinn told the Tribune in a statement earlier this year.

Economic development officials in Illinois support the programs, but critics, including some experts, question whether the incentives really pay off.

"Quinn is playing favorites with big businesses at the expense of small businesses," Rep. Jack Franks, D-Marengo, said Tuesday. Franks said that while the big companies are important, the state can't continue to throw money at them.

Quinn's efforts come at a time when the state is in fiscal crisis and recently raised corporate taxes to 7 percent from 4.8. However, many larger companies pay little, if any, taxes, and recent legislation signed by the governor allows certain companies getting incentives, including Motorola Mobility and Mitsubishi, to collect taxes its employees would have paid the state.

"(The state) has a finite amount of funds," Franks said.

Franks said the state should be working with small to midsize companies and focusing on removing the bureaucracy businesses have deal with to get basic permits instead of paying big firms to stay.

A Tribune report this year revealed that the EDGE program does not always pay out. During the program's first nine years, companies failed to qualify for the credits about half of the time.

Meanwhile, the battles among states to retain or lure companies has intensified. Several states are trying to lure Sears Holdings Corp., parent of both Sears and Kmart stores, and Quinn has indicated he will try to keep the company headquartered in Hoffman Estates.

Neighboring states Indiana and Wisconsin have become more aggressive in trying to lure companies. Indiana has an ad campaign that aims specifically at trying to pull Illinois companies over the border. In addition, Indiana is reducing its corporate tax rate to 6.5 percent over a four-year period. Both Indiana and Wisconsin shot up in rankings of business-friendly states in a survey conducted by CEO magazine. Illinois had fallen near the bottom in the same survey.

Fighting back, Illinois has boosted its incentive offerings. The most recent list of packages was disclosed by the state in response to requests from the Tribune.

The list included several high-profile deals, including a package valued at more than $117 million to Motorola Mobility Holdings Inc. to keep the technology company from moving its headquarters and operations to Texas or California; a package of nearly $30 million to retain a Mitsubishi Motors Corp. production plant in Normal; and a $22 million package to help Continental Tire expand its plant and North American headquarters in Mount Vernon.

Other packages include $4.3 million to steel-maker Evraz Inc. NA to move its headquarters from Portland, Ore., to the Aon Center in late June; and $2.3 million to Full-Fill Industries to add 150 workers and expand production of cooking oil spray, including Pam for ConAgra Foods.